[Rules] Question on elevations/slopes, and, spotting

[J6A]

8.42 covers all cases that would block LOS between units at two different elevations as they (the rules) are couched in terms of relative elevations.  So, yes, a unit spotting from 40-m would see over any 20-m obstruction, even a unit "hiding" right behind one (e.g. a unit in a clear hex just "behind" a 20-m woods or town.  Of course, a town or woods on a 20-m elevation is itself effectively 40-m.  

Agreed. As another (painful) example, consider RtB map #14 and its large wooded hills (40m and 60m high). I've played scenario #13 "Hard go" from Go for Broke and it was indeed ... hard going. One unit on the top of the hill has a clear view on most of the woods hexes down there.

Of course, limiting terrain still applies.